Stockholm (NordSIP) – In the quest for a more sustainable future, responsible investors put a premium on transparency and accountability, as public disclosures provide the insights needed to make informed investment decisions. In this spirit, BlackRock, the world’s largest asset manager, disclosed it had identified 244 companies it considers to be “making insufficient progress integrating climate risk into their business models and disclosures.”
In a recent report detailing its approach to sustainability, the recent convert to the ESG cause specifically listed the worst 53 of these companies. According to the asset manager, these laggards’ lack of responsiveness warranted active opposition via proxy voting against the board of directors or of other shareholders climate-related proposals. The remaining 191 companies in the list were put’ on watch’ and were warned that they “risked voting action in 2021 if they do not make substantial progress”.
Of the 53 worst performers, two Nordic companies were singled out by the asset manager: Finnish energy producer, Fortum Oyj, featured prominently as one of the report’s case studies. Less discussed, but still mentioned in the report was BlackRock’s concerns about Swedish-based truck-manufactured Volvo AB.
In a specific section, the report explains BlackRock’s concern with Fortum. “In early 2020, it undertook a transaction that significantly increased its exposure to coal-fired power generation and therefore the carbon intensity of its business. BIS considered this a retrograde step not aligned with long-term shareholders’ interests.” In response, the asset manager voted against the discharge of the board and president of Fortum. A shareholder measure requiring Fortum to amend its Articles of Association to specify and alignment of business operation with a target limiting global warming to 1.5°C was met with abstention. Although BlackRock approved of the goal, it argued such an amendment was not the best way to deal with the issue.
Although the report does not elaborate on the vote against Volvo’s resolutions, a BlackRock Voting Bulletin from June sheds some light on the issues at play. In that document, the asset manager expressed “concerns about progress on climate-related risks reporting, the structure of executive pay at the company and the approach taken by the shareholder to micromanage company activities.” In addition, BlackRock noted that despite acknowledging the systemic risk that climate change represents for Volvo, “there is limited disclosure beyond this in its public reporting and no detail on oversight or its strategy to mitigate the impact of climate risk on its business.” Regarding its vote against the election of the Board Chair, BlackRock added that “we are holding Mr Svanberg to account for the current lack of adequate climate-related risks disclosures and expect more fulsome disclosure regarding the company’s long-term adaptation strategies in line with the TCFD by next year.”